Texas Bar Journal - January 2013

Labor and Employment Law

Michael P. Maslanka 2012-12-26 02:17:12

First up, the Texas Supreme Court, which had a busy 2012. It denied a subset of age discrimination claims brought under the Texas Commission on Human Rights Act now in the Texas Labor Code. The question before the court was, “can a plaintiff state an age discrimination claim if she is replaced by a younger employee?” The answer by a 6-3 vote: no.
Essentially, the majority asked, “where’s the discrimination?” But now that the cork to the Genie’s bottle has been popped, where does it end? Same result when a black replaces a black or an Asian an Asian? We’ll see. In making its ruling, the court rejected the more pro-employee stance of the 5th Circuit, which allows a plaintiff in these circumstances to at least take a swing at developing evidence of age discrimination. Check it out at Mission Consolidated Independent School District v. Garcia, 253 S.W.3d 653 (Tex. 2008).
The court also spiked the right to trial by jury in an employment case. In In Re Frank Kent Motor Company d/b/a Frank Kent Cadillac, 361 S.W.3d 628 (Tex. 2012), the court enforced a jury waiver agreed to by the plaintiff/ employee. Yes, it is true that the Texas Constitution affirmatively states that “the right to trial by jury shall remain inviolate,” but it turns out that what the law says isn’t always what it means. The court’s approach was formulaic: the employer promulgated the no-jury rule; the plaintiff continued working after the promulgation; and thus, he accepted its terms. Yes, the right to trial by jury is “inviolate,” but, like any other right, it can be waived.
And while the courts love alternate dispute resolution that result in fewer jury trials, their embrace goes just so far. In 2012, the 5th Circuit negated an arbitration agreement as illusory. Simple facts: the agreement was embedded in a handbook; the handbook stated that all policies in the handbook could be amended or nuked at the employer’s discretion; thus, the promise by the employer to go to arbitration could be yanked at any time. The irony is the employer really wanted to go to arbitration, but the court found the instructions defective and intent irrelevant. John Carey et al v. 24 Hour Fitness, 669 F.3d 202 (5th Cir. 2012).
There is the cut and dried and there is the vague and confusing in the Texas Supreme Court’s decision in Safeshred Inc. v. Martinez, 365 S.W.3d 655 (Tex. 2012). Here is the cut and dried: punitive damages are an element of damages in a Sabine Pilot case, which prohibits an employer from terminating an employee for the sole reason that he refuses to perform an act that could land him in jail. The court stated that the imposition of punitives would not be supported if the plaintiff only showed (a) that he was terminated in violation of the law; (b) that the employer’s request subjected the employee or others to a dangerous situation (here, driving a truck with an allegedly insufficiently secured load in the back of the driver’s trailer); or (c) that the employer noted in its records that the plaintiff was ineligible for re-hire.
What can? Piling on after the termination and seeking to inflict greater harm to the employee other than the fact of termination, such as defaming the employee or taking actions that the employer is not otherwise legally entitled to take. The best advice for employers: like a romantic breakup, never see or deal or talk about the former employee.
Now, for the vague and confusing. The court, in a footnote, also held that punitive damages would be appropriate if the employer were aware when firing the employee that the law forbids termination for refusing to perform an illegal act. This language makes it sound as if an educated employer, one that understands what the law prohibits, will face punitive damages because it knows the law. This article’s author believes that the court really meant to say that punitive damages can be awarded if the employer knew it was terminating the employee in violation of the law but went ahead and did so anyway.
In Wansey et al v. Hole, 379 S.W.3d 246 (Tex. 2012), reh’g denied (Aug. 17, 2012), the court tossed the verdict in a negligent hiring case and cut to the quick: “A negligent finding requires a duty, breach, and damages proximately caused by that breach. Because (the plaintiffs) presented no evidence of harm caused by an employee pursuant to (the defendant’s) hiring policies, we hold that (the plaintiffs) did not present legally sufficient evidence of damages caused by (the employer’s) alleged negligence.” Just like in law school.
In Prairie View A&M University v. Chatha, 2012 WL 3800321 (Tex. Aug. 31, 2012), reh’g denied (Nov. 16, 2012), the court reversed a judgment from the Houston 1st Court of Appeals, which engrafted federal statutory law regarding limitations for equal pay claims onto the Texas Commission on Human Rights Act. The effect of doing so would have greatly expanded the time by which employees could file such claims. By a 7-2 vote, the court declined to do so. While secession is talked about, it is not in the offing and neither is whole hog adoption of a federal statute.
Now for some interesting developments at the 5th Circuit. The conventional wisdom for years was that an employee can’t settle a Fair Labor Standards Act claim without the approval of a court or the U.S. Department of Labor.
In April 2005, a federal district court in San Antonio, in a prescient opinion, said “not so fast” and approved a private settlement between an employer and an employee where there was a dispute over how much money the employee was owed. Let’s fast forward to 2012 and the 5th Circuit’s decision in Martin et al v. Spring Break 83 Productions, LLC, 688 F.3d 247, (5th Cir. 2012), which adopted the district’s court reasoning, which previously was a lone voice of reason in the FLSA wilderness. So, settling of a bona fide dispute over the amount owed or hours worked can be resolved through a private, non-approved settlement. But beware: this will not apply to substantive FLSA rights, such as whether an employee is exempt or non-exempt. In any event, it is always good to see the courts treating employees as adults.
This case, though, is small beer compared with Symczyk v. Genesis Health Care et. al., 656 F.3d 189 (3d Cir. 2011) cert. granted, 133 S. Ct. 26 (U.S. 2012), argued before U.S. Supreme Court this past fall. The FLSA does not have a traditional class action provision; rather it contains an optin provision in which an employee sues, and then asks the court to notify other employees of their right to join the lawsuit.
A head-them-off-at-the-pass strategy used by defendants is to make a Rule 68 offer under the federal rules, offering to allow the plaintiff to take judgment against it in the amount of her damages. That’s what the defendant did in this case. She never questioned the adequacy of the offer and rejected it. The case was dismissed because the trial court reasoned the plaintiff essentially no longer had a dog in the fight. The 3rd Circuit took a dim view of the maneuver: “When Rule 68 morphs into a tool for the strategic curtailment of representative actions, it facilitates an outcome antithetical to the purposes behind [the FLSA].” Lawyer loophole or legitimate tactic? As a famed Texas lawyer remarked, “There are no loopholes in the law, the law is the law.”
In EEOC v. Service Temps Incorporated, 679 F.3d 323 (5th Cir. 2012), the 5th Circuit court upheld an award of punitive damages under the Americans with Disabilities Act. The commission sued on behalf of a woman allegedly denied a job because she is deaf. The jury found against the employer and awarded punitive damages. The defendant tried to wiggle out of the award, arguing that its manager violated company policy in doing so and was therefore acting outside the scope of his authority. The 5th Circuit rejected this argument, essentially saying to the defendant: you invested the manager with hiring authority, so you bear the consequences if he abuses the authority.
And the U.S. Supreme Court heard argument in a crucial case on the definition of a supervisor for purposes of imposing liability for a hostile work environment claim. Behind Door No. 1: a supervisor is a person who is invested with the authority to hire, fire, and promote, which is what the 7th Circuit held and whose judgment the Supreme Court is reviewing. Behind Door No. 2: a supervisor is anyone who has the authority to direct an employee’s daily work assignments. If the Supreme Court goes with No. 2, buckle in for a litigation bonanza, because the dinner bell will start ringing.
A final word from the 5th Circuit on the FLSA’s antiretaliation provision by way of Lasater v. Texas A&M University at Commerce et al. Managers are excluded from bringing a retaliation claim. A claim requires protected activity and protected activity usually consists of a complaint regarding an employer’s pay practices. But when a manager relays or expresses concerns she is simply doing what the manager is paid to do; namely look out for the employer. Here is the court, in affirming summary judg- ment: “Voicing concerns is not only not adverse to the company’s interests, it is exactly what the company expects of a manager.” Indeed, in Lasater, the plaintiff was responsible for administering some of the university’s pay practices upon which her complaints centered.
Finally, let’s take a look at what the administrative agencies focused on. First, the Texas regional office of the National Labor Relations Board brought suit against the Dish Network in a case tried in Fort Worth, complaining, among other things, that its social media policy violated the National Labor Relations Act. On Nov. 14, an administrative law judge agreed, holding that the policy’s provisions (a) banning employees from making “disparaging or defamatory comments about DISH Network” and (b) banning employees from engaging in negative electronic discussion during “company time” each violated the employees’ rights of expression under the NLRA.
The U.S. Equal Employment Opportunity Commission in 2012 doggedly pursued claims, pursuant to an announcement from its headquarters, that employers arguably violate Title VII by refusing to hire applicants with criminal convictions because blacks are disproportionately convicted, and thus, the conviction bar acts as a proxy for race discrimination. Expect to see both the NLRB and the EEOC combine to press these issues in 2013.
MICHAEL P. MASLANKA
litigates and tries employment cases across Texas and heads the Dallas office of Constangy Brooks & Smith. You can read his blog at www.texaslawyer.typepad.com/ work_matters or buy his most recent books “Maslanka’s Field Guide to the FMLA(3d Edition 2013)” and “Maslanka’s Pocket Guide to Employment Law (2013)” at texaslawyerbooks.com.